How To Forecast Real Estate Market Cycle Opportunities

One can forecast real estate market cycle opportunities by following the relationship between market value and replacement cost.

Buy low and sell high, right? This simple concept is the foundation of investing in any type of commodity. No matter how complex somebody tries to make real estate investing appear, you only need to remember to sell for a higher price than you paid. And wouldn't it be nice if you knew when the "buy low" times were, as well as the timing for "sell high?"

Both of these are actually possible if you know how to forecast real estate market cycle opportunities. To do so, you must pay attention to several different factors in your local housing market, and most will be regularly covered by the top real estate blog for your area. Even without the expert coverage, you can do this yourself with very little experience necessary.

Forecasting Real Estate Market Cycles

Real estate market cycles are created by the imbalance that occurs between supply and demand, just like in any other type of market. When supply is too low for demand, values rise and producers enter the market with more product. As competition and supply among producers (home builders and developers) increases and outpaces demand, pricing pressures increase and values drop. Producers reduce production until demand returns to outpace supply.

Because there are many players in the real estate market, producers miscalculate the current and future rate of demand. These miscalculations lead the market to the cycles of over-supply and under-supply. So how does knowing this help you learn to forecast real estate market cycle opportunities? Just check out this short real estate video.

Current Real Estate Market Cycle

Many homes for sale in Tallahassee are priced at levels below which they can be rebuilt. This means that we have moved back into a "buy cycle" for the first time since 2003, when property values moved well into the "sell cycle" levels. Back then, properties we selling at such high levels that it was very difficult to find sound real estate investments.

Our current buy-cycle is very likely to last for a minimum of five years, with the next three years providing the greatest opportunities for "buy and hold" investors. My recommendation is to pay attention to current real estate supply and demand information and to work with an expert in your local housing market.

Joe Manausa, MBA is a 26 year veteran of real estate brokerage in the State of Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.